New Ulm State Bank v. Moore

• Decision Date: 04 April 1966
• Docket Number: No. 2144,2144
• Citation: 185 So.2d 367
• Parties: NEW ULM STATE BANK v. Wilburn E. MOORE.
• Court: Court of Appeal of Louisiana — District of US

Page 367

185 So.2d 367

NEW ULM STATE BANK v. Wilburn E. MOORE.

No. 2144.

Court of Appeal of Louisiana, Fourth Circuit.

April 4, 1966.

Rehearing Denied May 2, 1966.

John E. Jackson, Baldwin J. Allen, and John E. Jackson, Jr., Bernhardt C. Heebe, New Orleans, for defendant-appellant.

E. L. Guidry, Jr., St. Martinsville, for plaintiff-appellee.

Before McBRIDE, CHASEZ, and BARNETTE, JJ.

BARNETTE, Judge.

Plaintiff brought its suit on two promissory notes against defendant for the full principal, totalling $10,000, plus interest and attorney's fees. After trial on the merits, the district court entered judgment for the plaintiff for the full amount as prayed, and defendant has appealed suspensively from that judgment.

The first note was executed on December 31, 1959, at New Ulm, Texas, in the amount of $5,000, payable in six months to plaintiff. The maker of the note was Inland Engineering Company, Inc., by its president. The second note was the same in all respects with the exception that it was dated March 19, 1960, and was payable in 90 days. At the request of the maker, defendant endorsed both notes in New Orleans on the days on which they were executed. He was the last of four accommodation endorsers to sign the instruments.

Appellant raised several defenses at trial, all of which were rejected by the court, and he has reurged only one of them on appeal . We have considered the defenses argued in the district court which have not been raised on this appeal and find no error in the disposition of them by the trial court. Therefore, we will not discuss them specifically.

The defense urged on appeal is that plaintiff discharged defendant on the notes by discharging the maker and the prior endorsers. In this contention he relies on section 120 of the Negotiable Instrument Law, LSA-R.S. 7:120, and Union Nat. Bank v. Grant, 48 La.Ann. 18, 18 So. 705 (1895). Since the Grant case was decided nine years before the passage of Act 64 of 1904, which adopted the Negotiable Instrument Law we are not constrained to follow it, even if it were applicable on its facts.

Section 120 of the NIL provides in part: 'A person secondarily liable on the instrument is discharged: * * * (3) By the discharge of a prior party * * *.' Appellant claims that the president of the bank discharged the maker and the other endorsers by 'charging off' the loan as an asset of the bank. The evidence shows that the action taken by the bank was a matter of internal banking procedure whereby a delinquent note is satisfied out of undivided bank profits so that it can be removed from the list of assets of the bank. There was no...